Credit, collections & insolvency news

Nearly a quarter of all credit card searches carried out through Experian are for credit builder cards, new analysis from its first Credit Search Barometer has revealed. These cards give those with “thin” credit files or those with low credit scores the chance to get on track and gradually improve their creditworthiness by showing they can borrow responsibly. The latest figures show that 24% of all credit cards searched for in the last year are for credit builder cards as Brits try and take control of their finances.

The report says that surprisingly, those looking at these cards are older than you might expect. Rather than being in their 20s – when you might assume consumers are looking to build their credit history – the average age of those shopping for builder cards is 34. Less surprising is that these customers also have low credit scores. These customers have an average Experian credit score of 609, which falls into the “poor” band category.

Further analysis reveals that loan shoppers are also trying to deal with their debt, with a third (33%) searching for a consolidation loan. On average, shoppers are looking to borrow nearly £11,000 (£10,915) over five years to clear their assorted debts.

Meanwhile, some 46.8% of mortgage shoppers were looking for trackers In May, up from just 32.5% in April. While it is likely many of these customers will ultimately opt for a fixed rate mortgage, the data indicates that potential homebuyers have been encouraged to consider a tracker for their mortgage following the Bank of England (BofE) decision in May to once again hold interest rates at 0.5%.

The level of consumers looking at variable mortgages dropped from 35.6% in April to 29% in May, while those looking for fixed-term deals fell from 31.7% to 24.1%.

Amir Goshtai, MD, Experian Marketplace and Affinity at Experian, said: “Our new Credit Search Barometer gives a real flavour of what consumers are prioritising when it comes to credit cards, loans and mortgages. We can see that people looking to take control and improve their personal finances, whether that be through a credit builder card or consolidation loan. But it is interesting that the average age of those looking to build their credit score is 34 – you’d assume that those shopping for these types of cards would be much younger and could be seen as a sign that some have struggled with borrowing in their 20s.

“The Bank of England held the Base Rate again last week, but with speculation that a rise could come as soon as August, people shopping for a mortgage will have to think carefully about what option will be best for them.”